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CLASS ACTION COMPLAINT
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LAW OFFICES OF RONALD A. MARRON RONALD A. MARRON (SBN 175650) [email protected] SKYE RESENDES (SBN 278511) [email protected] WILLIAM B. RICHARDS, JR. (SBN 298552) [email protected] MICHAEL T. HOUCHIN (SBN 305541) [email protected] 651 Arroyo Drive San Diego, California 92103 Telephone: (619) 696-9006 Facsimile: (619) 564-6665 LAW OFFICE OF DAVID ELLIOT DAVID ELLIOT (SBN 270381) [email protected] 2028 3rd Avenue San Diego, CA 92101 Telephone: (858) 228-7997 Counsel for Plaintiff and the Proposed Class
UNITED STATES DISTRICT COURT FOR THE
CENTRAL DISTRICT OF CALIFORNIA
TED SHIMONO, on behalf of himself, all
others similarly situated, and the general
public,
Plaintiff,
v.
HARBOR FREIGHT TOOLS USA, INC.,
Defendant.
Case No.: CLASS ACTION COMPLAINT 1. Violation of California’s Unfair Competition Laws (“UCL”); California Business & Professions Code §§ 17200, et seq. 2. Violation of California’s False Advertising Laws (“FAL”); California Business & Professions Code §§ 17500, et seq. 3. Violations of California Consumer Legal Remedies Act (“CLRA”); Civ. Code §§ 1750, et seq. 4. Deceit by Suppression of Facts; Cal. Civ. Code § 1710(3) DEMAND FOR JURY TRIAL
Case 5:16-cv-01052 Document 1 Filed 05/20/16 Page 1 of 37 Page ID #:1
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Plaintiff TED SHIMONO (“Plaintiff” or “Mr. Shimono”), by and through his
undersigned counsel, hereby brings the below claims on behalf of himself, all others
similarly situated, and the general public against DEFENDANT HARBOR FREIGHT
TOOLS, INC. (“Harbor Freight” or “Defendant”) alleging the following on personal
knowledge or, where Plaintiff lacks personal knowledge, upon information and belief,
including the investigation of his counsel. The claims and other legal contentions alleged
in this Complaint are warranted by existing law or by a non-frivolous argument for
extending, modifying, or reversing existing law, or for establishing new law, and all
factual contentions have evidentiary support or will likely have evidentiary support after
a reasonable opportunity for further investigation and discovery:
I. JURISDICTION AND VENUE
This Court has diversity jurisdiction over this action pursuant to the Class
Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1332(d)(a), because the matter in
controversy exceeds $5,000,000 exclusive of interests and costs, and this matter is a
nationwide class action in which more than two thirds of the Class Members, as defined
herein, are citizens of states other than California. Defendant maintains its headquarters
and principal place of business in Calabasas, California. Plaintiff is domiciled in the
county of Riverside, State of California, and is a citizen of California.
This Court has personal jurisdiction over Defendant because Defendant
maintains its principal place of business in Calabasas, California, and Defendant has
continuous and systematic contacts with this District and the state of California as to
essentially render it “at home” in this District. Moreover, Defendant has purposefully
availed itself to the laws and benefits of doing business in this District and Plaintiff’s
claims arise out of Defendant’s forum-related activities.
Venue is proper because Defendant “resides” in this District, and a
substantial part of the events alleged in this Complaint giving rise to Plaintiff’s claims,
occurred in this District.
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II. NATURE OF THE ACTION
Plaintiff brings this class action to seek redress for himself and a class of
consumers, defined herein, who were deceived by Defendant’s advertising, marketing,
and sales practices.
Harbor Freight Tools USA, Inc. is a discount tool and equipment retailer.
Harbor Freight offers its products through over 600 retail stores in 47 states, by telephone
catalog sales through call centers, and via its own online website.1
Through comprehensive and consistent fake-sale-price advertising,
Defendant falsely created in consumers the impression that “sale priced” merchandise
was reduced in price from Defendant’s previous retail prices, that advertised “savings”
were real when they were not, and that advertised “comp at” prices were valid
comparisons with equivalent merchandise—also false.
These deceptive tactics induced consumers to purchase poor-quality
merchandise at inflated prices.
During the Class Period, Defendant Harbor Freight deceived, and continues
to deceive, Plaintiff and the Class by falsely advertising its merchandise, including, but
not limited to, tools, equipment, accessories, and other products at purported “sale”
prices. Defendant’s advertising uniformly compared these ostensible sale prices to
invented “regular” prices, “Only” prices, and “comp[are] at” prices for the merchandise,
which were, and are, misrepresented as prevailing market retail prices, customary store
prices, and/or prices of comparable merchandise, from which fictitious savings were then
calculated and communicated to the consumer through various advertising mediums.
Defendant’s supposed discounts were calculated from sham “regular” or
“comp at” prices that were artificially inflated, and were never the regular retail prices
for Defendant’s merchandise or comparable retail prices for products of the same quality
or value as the products that Defendant sold. In addition, the represented “retail” or “comp
1 http://www.harborfreight.com/ (last visited May 4, 2016)
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at” prices were not the prevailing market retail prices within three months immediately
preceding the publication of the advertised former prices, as required by California law.
Defendant advertised its deceptive and misleading pricing campaign to
consumers at the point of purchase and through periodically-mailed and distributed
flyers, catalogs, circulars, and other promotional materials, in-store displays, web pages,
emailed “offers,” and print advertisements. For example, in many of Defendant’s retail
outlets, the fictitious discount price scheme is prominently displayed throughout the store,
advertising supposed deep discounts on essentially every single item of inventory sold in
the store.
Defendant sells branded products, as well as their own exclusive house-
brand products, at a particular price- and quality-point. There is no “comparable price”
for many of these products other than the price set by Defendant. The difference between
the “sale” price and the advertised “regular” or “comp at” prices is a false discount used
to induce consumers into purchasing products they have been led to believe are
significantly discounted.
Through its false and deceptive marketing, advertising, pricing, and sales
scheme, Defendant violated, and continues to violate, California law prohibiting the
advertising of goods for sale as discounted from former prices which are false, and
prohibiting misleading statements about the existence and amount of price reductions.
Specifically, Defendant violated, and continues to violate, California’s Business &
Professions Code §§ 17200, et seq. (“UCL”), California’s Business & Professions Code
§§ 17500, et seq. (“FAL”), California’s Consumers Legal Remedies Act, California Civil
Code §§ 1750, et seq. (“CLRA”), and the Federal Trade Commission Act (“FTCA”),
which prohibits “unfair or deceptive acts or practices in or affecting commerce” (15
U.S.C. § 45(a)(1)) and false advertisements (15 U.S.C. § 52(a)).
In addition, Defendant advertises coupon savings that state, for example,
“20% off your purchase” in bold, giant red type, with a tiny qualifier “of any one item”
below. These “coupon savings” also constitute deceptive advertising, for two reasons.
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In addition to printing the coupons so as to deliberately mislead
customers—the fact that the customer will receive 20% off one item rather than their
entire purchase is deliberately obscured from the consumer—when consumers try to use
the “% off” coupon, sales associates do not apply the percentage savings to an item of the
customer’s choosing but rather apply the percentage discount to the lowest-priced item
in the customer’s order, rendering false the “any item” percentage savings as advertised.
Further, Defendant frequently advertises different prices for the same item
simultaneously, and when customers attempt to purchase such merchandise at retail
stores, Defendant charges the consumer the highest advertised price, in violation of
California consumer protection laws.
Accordingly, Plaintiff brings this action on behalf of himself and all other
similarly situated consumers/customers who have purchased one or more products at
Defendant’s retail stores, through the call center, or online, which were deceptively
represented as discounted from false former prices, and/or who were overcharged for
advertised merchandise or deceptively induced by misleading coupon offers to purchase
merchandise. Plaintiff brings this action in order to halt the dissemination of this false,
misleading, and deceptive pricing scheme, correct the false and misleading perception it
has created in the minds of consumers, and obtain redress for those who have purchased
deceptively priced products or been defrauded by Defendant in their purchases. Plaintiff,
on behalf of himself and the Class, seeks restitution and other equitable remedies,
including an injunction under the UCL and FAL, as well as restitution and damages, and
an injunction under the CLRA.
III. PARTIES
Plaintiff Ted Shimono
Plaintiff TED SHIMONO is a resident and citizen of Lake Elsinore,
California. Mr. Shimono, in reliance on Defendant’s false and deceptive advertising,
marketing, and “discount” pricing schemes, purchased numerous tools and other items of
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merchandise for himself and his family between approximately June 2013 and March
2016 at a Harbor Freight retail store located in Murrieta, California.
Among other merchandise, Mr. Shimono purchased security lights, tool
bags, saw horses, and numerous other tools and other merchandise from Defendant.
All of this merchandise was advertised as having “regular” prices, “retail”
prices, “comp at” prices, or “[o]nly” [regularly priced] prices, and as being offered to the
customer at “sale” prices wherein the purported sale price gave the illusion of offering
large discounts from the store’s customary price or market price.
These advertised discounts were illusory. These products had not actually
been sold or offered for sale at the represented advertised prices at Defendant’s retail
stores, online store, or in its catalog, at that price within the 90-day time period
immediately preceding Plaintiff’s purchases, and any comparison prices were not valid
comparisons to equivalent or comparable merchandise.
Plaintiff suffered injury and was damaged economically by his purchases of
Defendant’s products. Plaintiff was induced by Defendant’s falsely advertised discounts
and sale prices to buy products he would not have purchased absent the false advertising,
and to purchase those products at prices greater than their true market value.
Mr. Shimono would consider buying Harbor Freight products again if the
sales prices were not marketed in a deceptive manner that is likely to mislead consumers
like himself.
Defendant Harbor Freight Tools USA, Inc.
Defendant Harbor Freight Tools USA, Inc. is a Delaware corporation that
maintains its principal corporate executive offices and headquarters in Calabasas, located
in Los Angeles County in the state of California. Defendant is registered to do business
in California as entity number C2111204.
Defendant operates Harbor Freight Tools retail stores as well as the
harborfreight.com website and a call center to process telephone orders, and advertises,
markets, distributes, and/or sells tools, equipment, accessories, and other merchandise
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and products in California and throughout the United States. Plaintiff is informed and
believes, and based thereon alleges, that Defendant is legally responsible for the events,
happenings, circumstances, and/or occurrences alleged herein, and for the damages
suffered by Plaintiff and Class Members, as defined herein.
IV. LEGAL AND FACTUAL ALLEGATIONS
A. False Former Price Comparison Schemes Are Unlawful
The United States Federal Trade Commission describes false “former price
comparison” schemes as follows:
One of the most commonly used forms of bargain advertising is to offer a
reduction from the advertiser’s own former price for an article. If the former
price is the actual, bona fide price at which the article was offered to the public
on a regular basis for a reasonably substantial period of time, it provides a
legitimate basis for the advertising of a price comparison. Where the former
price is genuine, the bargain being advertised is a true one.
If, on the other hand, the former price being advertised is not bona fide but
fictitious—for example, where an artificial, inflated price was established for
the purpose of enabling the subsequent offer of a large reduction—the
“bargain” being advertised is a false one; the purchaser is not receiving the
unusual value he expects. In such a case, the “reduced” price is, in reality,
probably just the seller’s regular price.
16 C.F.R. § 233.1(a) (emphasis added).
California law also expressly prohibits false former pricing schemes:
For the purpose of this article the worth or value of any thing advertised is the
prevailing market price, wholesale if the offer is at wholesale, retail if the offer
is at retail, at the time of publication of such advertisement in the locality
wherein the advertisement is published.
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No price shall be advertised as a former price of any advertised thing, unless
the alleged former price was the prevailing market price as above defined
within three months next immediately preceding the publication of the
advertisement or unless the date when the alleged former price did prevail is
clearly, exactly and conspicuously stated in the advertisement.
CAL. BUS. & PROF. CODE §17501.
California law further prohibits businesses from “[m]aking false or
misleading statements of fact concerning reasons for, existence of, or amounts of price
reductions.”2
During the Class Period, Defendant intentionally concealed, and continues
to conceal, material facts its customers, including Plaintiff and Class Members, regarding
the truth about its former-price and comparison price advertising in order to induce them
to purchase Defendant’s products in retail stores, through call centers, and/or on its
internet website.
As an illustrative example, Harbor Freight advertises the market price and
sale price of a 3/8-inch diameter, 50-foot retractable hose reel as: “comp at $166.00” –
“Sale: $89.99”.3
2 See Cal. Civ. Code § 1770(a)(9) & § 1770(a)(13).
3 https://web.archive.org/web/20160427044119/http://www.harborfreight.com/38-in-x-
50-ft-Retractable-Hose-Reel-69265.html (last visited May 3, 2016).
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But a comparable hose reel, of equivalent or superior quality, by name-brand
manufacturer Husky, is available from Home Depot for $64.98.4
Moreover, an essentially identical unit to the one offered on “Sale” by
Defendant – albeit photographed from a different angle – is available from a competitor,
ReelWorks, for $59.99, reduced from its suggested retail price of $89.995—the same
$89.99 price that Harbor Freight claims is a drastically-reduced “Sale” price. And the
competitor’s product is rated for 20% higher pressure.6
4 http://www.homedepot.com/p/HUSKY-3-8-in-x-50-ft-Hybrid-Retractable-Hose-Reel-
540HR-RET-HOM/205331905 (last visited May 3, 2016).
5 http://www.northerntool.com/shop/tools/product_200517529_200517529 (last visited
April 26, 2016).
6 Id.
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Further, the exact same unit, made by the same manufacturer, is available
from a retail business on Amazon.com for $67.29 plus shipping.7
7 http://www.amazon.com/Central-Pneumatic-Retractable-Water-
Hose/dp/B00AVKCJIA) (last visited May 3, 2016).
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Defendant’s retractable hose reel was never offered for sale - or ever valued
at - $166.00 as Defendant claims. Defendant’s advertised “comp at” price is simply false
and deliberately intended to deceive consumers into paying higher prices.
This is not by any stretch of the imagination an isolated case. Harbor Freight
deliberately advertises similar fake sale pricing on countless items of merchandise, in all
categories of equipment, in an effort to mislead consumers.
Defendant’s fake sale pricing extends throughout its entire price range. A
brass pneumatic coupler set that Defendant claims to “comp at $8.99" and dramatically
reduce to a “Sale” price of $4.998 is available from a competitor for $3.40.9 The two
advertisements are shown below.
Harbor Freight
__________
8 http://www.harborfreight.com/brass-industrial-quick-coupler-set-5-pc-61915.html
(last visited May 4, 2016).
9 http://workersoutlet.com/Central-Pneumatic-5-Piece-Solid-Brass-Industrial-Quick-
Coupler-Set-B006ZBC43E.php (last visited May 4, 2016).
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Competitor
Similarly, during the Class Period Defendant advertised comparison prices
for an electrical welding unit, below, as “Only $299” or “comp at $519.” Both are false.
The table below shows the advertised price history of this unit, the Chicago
Electric Welding 170 Amp-DC, 240 Volt, MIG/Flux Cored Welder, uniformly identified
by Defendant by the exact same stock number and specifications. This unit was never
sold at the former retail price or comparison price advertised by Defendant.
Defendant’s “Sale” Pricing History: Welding Unit10
10 https://web.archive.org/web/20150909102601/http://www.harborfreight.com/
welding/mig-flux-welders/170-amp-dc-240-volt-migflux-cored-welder-68885.html,
(last visited April 20, 2015)
Date Defendant’s
comparison price
Advertised
“Sale” price
April 20, 2016 “comp at $519.99” 184.99
October 7, 2015 “comp at $519.99” 179.99
September 9, 2015 Only $299.99 189.99
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In yet another example, Defendant currently lists an impact wrench for
“Sale” at $99.99 and advertises a “compare at” price of $249.99. But Defendant has for
years sold this tool at the exact same current “Sale” price, or less—though it nearly
doubled the false comparison price to its current $249.99, further exaggerating the
illusion of savings.
Below are examples of the “compare at” and sham implied-retail “Only”
prices at which Defendant has priced this tool, a Central Pneumatic brand 1/2 in. Air
Impact Wrench, Item#68424, and the corresponding “Sale” prices over time.
Defendant’s “Sale” Pricing History: Impact Wrench
Date Comparison price Advertised
“Sale” price
Claimed savings
for consumer
April 20, 2016 “comp at” $249.99 $99.99 $150
February 16, 2016 “comp at” $249.99 $84.99 $165
December 21, 2015 “comp at” $249.99 99.99 $150
July 21, 2105 Only: $129.99 99.99 $30
March 16, 2015 Only: $129.99 99.99 $30
July 29, 2014 Only: $129.99 99.99 $30
March 1, 2014 Only: $129.99 84.99 $45
January 22, 2014 Only: $129.99 97.99 $32
June 27, 201311 Only: $129.99 94.99 $35
11 https://web.archive.org/web/20130318215858/http://www.harborfreight.com/12-in-
professional-air-impact-wrench-68424.html (last visited April 26, 2016).
June 27, 2015 Only $299.99 189.99
February 23, 2015 Only $299.99 189.99
September 27, 2014 Only $299.99 199.99
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Defendant’s current advertised “Sale” price of $99.99 is the highest price at
which Defendant has ever offered this tool for sale to consumers.
Defendant’s “comp at” wording for its sham retail or former-retail
advertised prices is a recent development. Defendant previously referred to its phony
comparison prices as the merchandise’s “regular price” or as an “Only” price, with a
strike-through of that price suggesting that the fake sale price was an actual reduction
from Defendant’s usual retail price.
For example, in July 2015 Defendant advertised a 6000 lb. capacity scissors
lift as having a regular price of “Only $1799.99” and a purported sale price of $1499.9912
as shown below:
12 https://web.archive.org/web/20150715081832/http://www.harborfreight.com/6000-lb-capacity-
scissor-lift-91315.html; last visited May 19, 2015.
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In October 2015, this same unit was being advertised as “comp at” $1955.99
instead of “Only 1799.99,” with the same “Sale” price of $1499.99.13 Defendant’s “Sale”
price hadn’t changed at all, but the savings promised to consumers had leapt by 50%.14
In fact, Defendant used fake “strike-through” prices and “regular” prices,
rather than “comp at” prices, to deceive consumers through nearly all of the class period.
To illustrate, this is Defendant’s advertising circular from March 201515
during the class period, showing sham “regular” retail prices and fictitious savings
calculated from those sham prices:
46. Other examples of Defendant’s fake sale pricing, from its catalog, website, and
retail stores, are too numerous to show here. Exhibit 1 includes Defendant’s current
“Sale” prices for its products offered on the Harbor Freight website. Defendant’s current
version of its fake retail price advertising scheme typically displays sham “comp at”
comparison prices, rather than the fake strike-through prices, “Only” prices, “regular”
prices, or other equally misleading descriptions of sham retail comparison prices that
13 https://web.archive.org/web/20151008052111/http://www.harborfreight.com/6000-lb-capacity-scissor-lift-91315.html 14 Id. 15 https://web.archive.org/web/20150321151920/http://www.harborfreight.com/
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Defendant has previously used. The wording varies but the result is the same: throughout
the Class period, Defendant’s fake “Sale” price advertising has been deceptive,
misleading, and in violation of California consumer protection law.
B. Harbor Freight’s “Comp at” Pricing Scheme is Also Unlawful
On or around September 2015, Defendant deliberately changed its
advertising of claimed retail comparison prices, from previously referring to these phony
prices as “regular” prices or “Only” prices—suggesting that even these false former or
retail prices were a good value—to instead describing its false comparison prices as
“comp at” prices, in an attempt to further deceive consumers including Plaintiff and Class
Members.
Defendant’s recent variation on its deceptive advertising scheme is equally
deceptive and continues to violate California and Federal law.
Federal advertising regulations specifically reference these types of
deceptive pricing practices.
In 16 CFR §§ 233 et seq., the Federal Trade Commission sets forth guidance
regarding what the agency considers deceptive pricing schemes, including “comparable
value” retail price comparisons.
According to the FTC, any “advertised higher price must be based upon fact,
and not be fictitious or misleading.” 16 CFR § 233.2(c).
Such comparison price advertising may only display a prevailing price, not
an unrepresentative price, and must be for merchandise “of like grade and quality” that
is “obtainable in the area”—“in other words, comparable or competing merchandise” to
that being advertised. 16 CFR § 233.2(c).
The FTC further specifies that “[t]he advertiser should, however, be
reasonably certain . . . that the price advertised as being the price of comparable
merchandise does not exceed the price at which such merchandise is being offered by
representative retail outlets in the area. . . . Unless a reasonable number of the principal
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outlets in the area are offering [the same merchandise at the advertised comparison price],
this advertisement would be deceptive.” Id.
During the Class Period, Defendant fraudulently concealed from and
intentionally failed to disclose to Plaintiff and Class Members the truth about its
advertised “Sale” prices and advertised, purported former “Only” prices and “comp at”
comparison prices, as well as alternate terms for comparison prices that Defendant has
used during the Class Period to imply former retail prices, market prices, and purportedly
valid comparison prices.
At all relevant times, Defendant has been under a duty to Plaintiff and the
proposed Class to disclose the truth about its false sale pricing, fictitious comparison
prices, and illusory discounts.
C. Other Deceptive Advertising Practices Employed by Harbor Freight
The fictitious discounts and sale prices, as alleged herein, are not the only
deceptive advertising that Defendant maintains.
Defendant advertises that “. . . Harbor Freight offers more than 7,000 tools
and accessories at quality levels that match or exceed competing brands, but at prices that
are up to 80% less.”16
Defendant also claims in its advertising: “We buy direct from the same
factories who supply the expensive brands and pass the savings on to you.”17
Defendant elsewhere claims to manufacture its tools and equipment itself,
in its own factories, in which Defendant claims to have “invested millions” in order to
supply “highest quality” merchandise at value prices.18
Defendant claims that “… our tools perform to professional standards and
stay tough for the long haul.”19
16 http://www.harborfreight.com/about-us (last visited May 4, 2016). 17 Id. 18 Id. 19 Id.
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Defendants’ customers report differently. Customer reviews include:
“Harbor Freight sells dangerous garbage”; “. . . piece of junk gauge from Harbor
Freight was off almost 10 psi.” “Don’t buy it at Harbor Freight if you need it to
work more than once.” “…falling apart in my hands.” “. . . did not work from the
very beginning”; “Turned it on and motor burned up”; “. . . safety switch failed
after only two uses, after only about 90 days [right after the warranty expired]”;
“[floor-tile removing tool] broke after removing approximately 15 tiles”;
“. . . second time I used it the pump stopped working.”
Much of Harbor Freight’s merchandise, which Defendant claims is
“highest” quality or “professional quality,” is, in the opinion of many of those who
purchased it, instead substandard and of poor quality.
Specifically, regarding Defendant’s retractable hose reel, for which
Defendant’s false comparison prices are discussed in Paragraphs 29-33 above, customer
comments about this product include:
• “. . . had for just over 90 days when the hose blew out.”
• “Hose blew up after only 3 months”
• “…fine for about a month then the hose began to leak air.”
• “The hose is unusably cracked for the entire 1" above the end fitting. I
bought my hose reel in 10/14, so it's approx [sic] 9 months old.”
• “… one week later the hose has three holes in it . . . The hose is rated
for 250 psi, my compressor doesn’t go above 125 psi.”
• “. . . only used a dozen times. First hose broke at spring, replaced hose
and fitting, one week later reel would not retract. 1 year 12 uses will
not buy again.”
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• “the hose needs patched every few days and I only run about 135psi.”
• “Purchased two of these terrible [products] and both have completely
failed”
• “… the rubber hose breaks first at the fitting after about a month of use
(just in time for the warranty to expire) then the spring that retracts the
hose completely breaks . . . after about 3 months the rubber hose begins
to tear and needs to be replaced. these are completely useless and should
be avoided at all costs.”
Such comments are not unique to this product, or any of the products
mentioned herein.
These are just a few examples of customer descriptions of the equipment for
which Defendant claims “Great Quality,” “performs to professional standards” and
“quality levels that match or exceed competing brands.”
To further the deception, Defendant omits from its advertising a crucial fact
about much of its merchandise: in contrast to warranties offered in the trade by its
competitors for similar mechanical equipment, for which warranty periods typically
range from one year to three years or more, Defendant offers only a 90-day limited
warranty on such equipment, and expressly disclaims all other warrantees—including the
common law warranty of merchantability.
Warranty length is an important feature for consumers in determining the
quality and value of merchandise. Where Defendant purports to compare its “Sale” prices
to “comp at” prices for ostensibly similar merchandise, Defendant’s price comparisons
are false and misleading for this reason as well, because in addition to comparing its
“sale” prices with those of tools of superior quality, the warranty that Defendant offers is
not comparable to that offered by competing retailers.
Defendant’s advertising claims of “professional quality” merchandise, and
of sourcing that merchandise “at the same factories” as more expensive, reliable brands,
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and quality that “matches or exceeds” competing brands, are also false and deceptive,
just as Defendant’s false sale price advertising, false coupon sales, deceptive advertising
of discounts and “% off” offers, and other deceptive practices described herein.
D. Plaintiff’s Experience with Harbor Freight
Between approximately June 21, 2013 and March 2016, Plaintiff shopped at
the Harbor Freight Tools USA retail store in Murrieta, California numerous times to
purchase tools, equipment, accessories, and other related merchandise for himself and his
family.
Plaintiff was induced to visit the retail store by print, direct-mail, and online
advertising that purported to offer steep discounts on quality merchandise.
That advertising purported to offer “Sale” prices and compared those
purported sale prices against much higher prices that Defendant intended consumers to
believe were Defendant’s prior retail prices, or actual or comparable market prices for the
same merchandise or merchandise of the same quality.
On each visit to the store, Plaintiff observed signage within the store and
price tags on or near the merchandise advertising significant savings on essentially all
merchandise in the store. Those claimed savings were calculated from what were
advertised by Defendant as former retail prices or comparable market prices.
Defendant’s marketing, advertising, and point-of-sale information
communicated to Plaintiff that all of this merchandise represented significant savings
relative to the products’ normal retail prices and comparable market values.
Based on this advertised information, Plaintiff decided to purchase
numerous items of merchandise during these visits, including, but not limited to, solar
security lights, tool bags, tarps, electric drills and drill bits, hammers, tool racks, storage
containers, and other merchandise, and did in fact purchase those items.
Specifically, relying upon Defendant’s misrepresentations and false and
deceptive advertising, among other items, Plaintiff purchased in or around June 2015 a
solar security light. The product advertising displayed a strike-through price of “Only
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$59.99”, suggesting that Harbor Freight’s usual price for this unit was $59.99 and that
the unit was being offered at a discount from that former price. This advertisement
represented that the unit was at that time being offered at a substantial discount from the
former price, showing the current price as: “Sale: $39.99”.
Defendant’s purported strike-through price and the implied price discount
and savings were false and misleading, as the prevailing retail price for the merchandise
during the three months immediately prior to Plaintiff’s purchase was not the strike-
through price advertised by Defendant.
Relying upon Defendant’s misrepresentations and false and deceptive
advertising, Plaintiff purchased this solar security light and was damaged thereby
economically.
Further, relying upon Defendant’s misrepresentations and false and
deceptive advertising, Plaintiff also purchased during the period of approximately
January through June 2015 a number of protective tarps in different sizes.
Defendant’s advertising for these tarps, which ranged in size from 5’6” by
7’ 6” to approximately 19’ by 29’, showed strike-through prices of, for example, “Only
$6.99”, “Only $8.99”, and “Only $39.99”, suggesting that these were Harbor Freight’s
usual prices for these products.
They were not. Defendant’s advertised strike-through prices or “Only
$xx.xx” implied former retail prices were never prices at which Defendant previously
sold this merchandise.
Defendant’s purported former prices and the implied price discount and
savings to the consumer were false and misleading, as the prevailing retail prices for the
merchandise during the three months immediately prior to Plaintiff’s purchase was not
the former price advertised by Defendant.
Defendant’s purported “comp at” “comparable” prices and corresponding
“discounts” and “savings” were similarly false and misleading, as the prevailing retail
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prices for equivalent or comparable merchandise during the three months immediately
prior to Plaintiff’s purchases were not the prices displayed by Defendant.
Relying upon Defendant’s misrepresentations and false and deceptive
advertising, Plaintiff purchased the above and other merchandise, and was damaged
economically thereby.
Plaintiff would not have purchased the tools and equipment, or would not
have paid as much for them, absent the affirmative misrepresentations made by
Defendant and Defendant’s failure to disclose pertinent information. As a result, Plaintiff
has been personally injured by and suffered economic injury as a direct and proximate
result of Defendant’s unlawful, unfair, and fraudulent conduct.
Defendant was aware that its comparative price advertising currently is and
at all times during the Class period was, false, deceptive, misleading, unlawful, and/or
unfair under California law.
Plaintiff relied upon Defendant’s artificially inflated comparison prices and
false discounts when purchasing tools and equipment from Defendant. Plaintiff would
not have made such purchases but for Defendant’s representations of fabricated original,
“regular,” market or “comp at” prices and false discounts.
Plaintiff and the Class reasonably and justifiably acted and relied on the
substantial price differences that Defendant advertised, and made purchases believing
that they were receiving substantial discounts on items of greater value than they actually
were. Plaintiff, like other Class Members, was lured in, justifiably relied on, and was
damaged by these deceptive pricing schemes that Defendant carried out throughout the
Class Period.
Plaintiff would like to shop at Harbor Freight again, but cannot trust Harbor
Freight’s current price-comparison advertisements. Without tracking Harbor Freight’s
advertisements on a daily basis for each and every item, and conducting intensive price,
quality, and market research and analysis, Plaintiff and Class Members have no realistic
way to know which of Harbor Freight’s current or future price comparisons are false or
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deceptive. If the Court were to issue an injunction ordering Harbor Freight to comply
with California’s comparative price advertising laws, and prohibiting Harbor Freight’s
use of the deceptive and misleading practices discussed herein, Plaintiff would likely
shop at Harbor Freight again in the future.
V. CLASS ACTION ALLEGATIONS
Plaintiff brings this action on behalf of himself and all other similarly
situated Class Members pursuant to Rule 23(a), (b)(2) and (b)(3) of the Federal Rules of
Civil Procedure, and seeks certification of the following Class against Defendant for
violations of California consumer protection laws:
All individuals in the United States who purchased Defendant’s purportedly
discounted products, advertised at false “Sale” prices, for personal, family,
or household use, and not for resale, within four years prior to the filing of
this Complaint (“Class Period”).
Excluded from the Class is Defendant, as well as its officers, employees,
agents or affiliates, and any judge who presides over this action, as well as all past and
present employees, officers, and directors of Defendant. Plaintiff reserves the right to
expand, limit, modify, or amend this class definition, including the addition of one or
more subclasses, in connection with his motion for class certification, or at any other
time, based upon, inter alia, changing circumstances and/or new facts obtained during
discovery.
Numerosity: The Class is so numerous that joinder of all Class Members is
impracticable. Plaintiff is informed and believes, and based thereon alleges, that the
proposed Class contains hundreds of thousands of individuals who have been damaged
by Defendant’s conduct, as alleged in detail herein. The precise number of Class
Members is currently unknown to Plaintiff.
Predominance and Commonality: This action involves common
questions of law and fact, which predominate over any questions affecting individual
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Class Members. These common legal and factual questions include, but are not limited
to, the following:
a) Whether, during the Class Period, Defendant used false comparison price
labels and falsely advertised price discounts on its products sold in its retail
stores, by telephone, and/or online;
b) Whether, during the Class Period, the “Only”, “comp at”, “original”,
“regular price” or other “market” prices or comparison advertised by
Defendant were the prevailing market prices for the respective Harbor
Freight products during the three-month period preceding the dissemination
and/or publication of the advertised former prices or comparison prices;
c) Whether Defendant’s alleged conduct constitutes violations of the laws
asserted;
d) Whether Defendant engaged in unfair, unlawful, and/or fraudulent business
practices under the laws asserted;
e) Whether Defendant engaged in false or misleading advertising;
f) Whether Plaintiff and Class members are entitled to damages and/or
restitution, and the proper measure of that loss; and
g) Whether an injunction is necessary to prevent Defendant from continuing
to use false, misleading or illegal price comparisons.
Typicality: Plaintiff’s claims are typical of the claims of Class Members
because, inter alia, all Class Members have been deceived or were likely to be deceived
by Defendant’s false and deceptive price advertising scheme, as alleged herein. Plaintiff
is advancing the same claims and legal theories on behalf of himself and all Class
Members. As such, Plaintiff has the same interest in this matter as all Class Members,
and has no interests antagonistic to the interests of other Class Members.
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Adequacy: Plaintiff will fairly and adequately protect the interests of the
Class. Plaintiff has retained counsel experienced in complex consumer class action
litigation who are committed to the vigorous prosecution of this action, and have no
interests in the litigation that would potentially conflict with the interests of the Class.
Plaintiff has no antagonistic or adverse interest to those of the Class.
Superiority: The nature of this action and the nature of laws available to
Plaintiff and the Class make the use of the class action format a particularly efficient and
appropriate procedure to afford relief to him and the Class for the wrongs alleged. The
damages or other financial detriment suffered by individual Class Members is relatively
modest compared to the burden and expense that would be entailed by individual
litigation of their claims against Defendant. It would thus be virtually impossible for
Plaintiff and Class Members, on an individual basis, to obtain effective redress for the
wrongs done to them. Absent the class action, Class Members and the general public
would not likely recover, or would not likely have the chance to recover, damages or
restitution, and Defendant would be permitted to retain the proceeds of their fraudulent
and deceptive misdeeds.
All Class Members, including Plaintiff, were exposed to one or more of
Defendant’s misrepresentations or omissions of material fact claiming that former
“original” advertised prices were in existence. Due to the scope and extent of Defendant’s
consistent false “discount” price advertising scheme, disseminated in a years-long
campaign to California and nationwide U.S. consumers via a number of different
platforms—i.e., in-store displays, print advertisements, etc.—it can be reasonably
inferred that such misrepresentations or omissions of material fact were uniformly made
to all Class Members. In addition, it can be reasonably presumed that all Class Members,
including Plaintiff, affirmatively acted in response to the representations contained in
Defendant’s false advertising scheme when purchasing Harbor Freight merchandise at
Harbor Freight stores, through the call center, and online.
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Ascertainability: Class members can self-identify once the class is certified
and notice goes out. In addition, Defendant keeps extensive computerized records of its
customers through, inter alia, direct-mailing address databases, online contact forms, a
customer loyalty program called the “Inside Track Club”, call center records, and general
marketing program data. Defendant has one or more databases through which a
significant majority of Class Members may be ascertained, and Class Members may
therefore be contacted both through Defendant’s existing contact information, including
email and home addresses, and through social media and/or other means through which
notice of this action can be disseminated in accordance with due process requirements.
COUNT I
VIOLATIONS OF THE UNFAIR COMPETITION LAW
(CAL. BUS. & PROF. CODE §§ 17200, et seq.)
Plaintiff repeats and re-alleges the allegations contained in every preceding
paragraph as if fully set forth herein.
Plaintiff brings this Claim individually and on behalf of the members of the
Class against Defendant.
The UCL defines unfair business competition to include any “unlawful,
unfair or fraudulent” act or practice, as well as any “unfair, deceptive, untrue or
misleading” advertising. Cal. Bus. Prof. Code § 17200.
The UCL imposes strict liability. Plaintiff need not prove that Defendant
intentionally or negligently engaged in unlawful, unfair, or fraudulent business practices
- but only that such practices occurred.
A business act or practice is “unfair” under the UCL if it offends an
established public policy or is immoral, unethical, oppressive, unscrupulous or
substantially injurious to consumers, and that unfairness is determined by weighing the
reasons, justifications and motives of the practice against the gravity of the harm to the
alleged victims.
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Defendant’s actions, as alleged in detail herein, constitute “unfair” business
acts or practices because Defendant engaged in misleading and deceptive price
comparison advertising that represented false “regular” prices or comparison prices and
false “discount” prices leading to phantom markdowns. Defendant’s acts and practices
offended, and continue to offend, established public policy and Defendant engaged in
immoral, unethical, oppressive, and unscrupulous activities substantially injurious to
consumers.
The harm to Plaintiff and Class Members outweighs the utility of
Defendant’s practices. There were reasonably available alternatives to further
Defendant’s legitimate business interests, other than the misleading and deceptive
conduct described herein.
A business act or practice is “fraudulent” under the UCL if it is likely to
deceive members of the consuming public.
A business act or practice is “unlawful” under the UCL if it violates any
other law or regulation.
Defendant’s acts and practices, as alleged in detail herein, have deceived
Plaintiff and Class Members, and are highly likely to deceive members of the consuming
public. Plaintiff and Class Members relied on Defendant’s fraudulent and deceptive
representations regarding its “regular” prices, “comp at” prices, or other suggestions of
“market” prices, and the corresponding promised discounts for the Harbor Freight
products, which Defendant sells at its retail stores, through call centers, and on its website.
These misrepresentations played a substantial role in Plaintiff and Class Members’
decisions to purchase the products at promised steep discounts, and Plaintiff and Class
Members would not have purchased, or would not have paid as much for, this
merchandise without Defendant’s misrepresentations.
The FTCA prohibits “unfair or deceptive acts or practices in or affecting
commerce” (15 U.S.C. § 45(a)(1)) and prohibits the dissemination of any false
advertisements. 15 U.S.C. § 52(a). Under the FTC false former pricing schemes, similar
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to the ones implemented by Defendant, are described as deceptive practices that would
violate the FTCA:
(a) One of the most commonly used forms of bargain advertising is to offer
a reduction from the advertiser’s own former price for an article. If the
former price is the actual, bona fide price at which the article was offered
to the public on a regular basis for a reasonably substantial period of time,
it provides a legitimate basis for the advertising of a price comparison.
Where the former price is genuine, the bargain being advertised is a true
one. If, on the other hand, the former price being advertised is not bona fide
but fictitious - for example, where an article price, inflated price was
established for the purpose of enabling the subsequent offer of a large
reduction - the “bargain” being advertised is a false one; the purchaser is
not receiving the unusual value he expects.
(b) A former price is not necessarily fictitious merely because no sales at
the advertised price were made. The advertiser should be especially careful,
however, in such a case, that the price is one at which the product was
openly and actively offered for sale, for a reasonably substantial period of
time, in the recent, regular course of her business, honestly and in good faith
- and, of course, not for the purpose of establishing a fictitious higher price
on which a deceptive comparison might be based.
California law also expressly prohibits false former pricing schemes. Cal.
Bus. & Prof. Code § 17501, entitled “Value determinations; Former price
advertisement,” states:
For the purpose of this article the worth or value of any thing advertised is
the prevailing market price, wholesale if the offer is at wholesale, retail if
the offer is at retail, at the time of publication of such advertisement in the
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locality wherein the advertisement is published.
No price shall be advertised as a former price of any advertised thing, unless
the alleged former price was the prevailing market price as above defined
within three months next immediately preceding the publication of the
advertisement or unless the date when the alleged former price did prevail
is clearly, exactly and conspicuously stated in the advertisement.
As detailed in Plaintiff’s Third Cause of Action below, Cal. Civ. Code §
1770(a)(9), prohibits a business from “[advertising goods or services with intent not to
sell them as advertised,” and subsection (a)(13) prohibits a business from “[m]aking false
or misleading statements of fact concerning reasons for, existence of, or amounts of price
reductions.”
Defendant’s practices, as set forth above, have misled Plaintiff, the proposed
Class, and the general public in the past, and will continue to mislead in the future.
Consequently, Defendant’s practices constitute unlawful and unfair business practices
within the meaning of the UCL.
Defendant’s violations of the UCL through its unlawful, unfair, and
fraudulent business practices are ongoing and present a continuing threat that members
of the public will be deceived into purchasing products based on price comparisons of
arbitrary and inflated “regular” or other comparison prices to “sale” prices that created
merely phantom markdowns. These practices deceived and continue to deceive
consumers, causing financial injury to consumers like Plaintiff and the proposed Class.
Pursuant to the UCL, Plaintiff is entitled to, and hereby seeks, preliminary
and permanent injunctive relief ordering Defendant to cease its unfair, unlawful, and/or
fraudulent business practices, as well as disgorgement and restitution to Plaintiff and the
Class of all of Defendant’s revenues associated with its unfair competition, or such
portion of those revenues as the Court may find equitable.
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COUNT II
VIOLATIONS OF THE FALSE ADVERTISING LAW
(CAL. BUS. & PROF. CODE §§ 17500, et seq.)
Plaintiff repeats and re-alleges the allegations contained in every preceding
paragraph as if fully set forth herein.
Plaintiff brings this Claim individually and on behalf of the members of the
Class against Defendant.
Cal. Bus. & Prof. Code § 17500 provides that “[i]t is unlawful for
any...corporation...with intent...to dispose of...personal property...to induce the public to
enter into any obligation relating thereto, to make or disseminate or cause to be made or
disseminated from this state before the public in any state, in any newspaper or other
publication, or any advertising device, or by public outcry or proclamation, or in any
other manner or means whatever, including over the Internet, any statement...which is
untrue or misleading, and which is known, or which by the exercise of reasonable care
should be known, to be untrue or misleading.”
The “intent” required by Cal. Bus. & Prof. Code § 17500 is the intent to
dispose of property, and not the intent to mislead the public in the disposition of such
property. Defendant had the intent to dispose of its property through the business
practices complained of herein.
This section also provides, “No price shall be advertised as a former price
of any advertised thing, unless the alleged former price was the prevailing market price
as above defined within three months next immediately preceding the publication of the
advertisement or unless the date when the alleged former price did prevail is clearly,
exactly and conspicuously stated in the advertisement.” Cal Bus. & Prof. Code § 17501.
Defendant’s tactic of advertising discounted prices from false “market”
prices, regular prices, or comparison prices associated with Harbor Freight products,
which were never the true prevailing “market” prices of those products and were
materially greater than the true prevailing prices, was an unfair and misleading practice.
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This deceptive practice gave consumers the false impression that these or comparable
products were regularly sold in the market for a substantially higher price than they
actually were, creating in consumers the false impression that Defendant’s products were
worth more than they actually were.
Defendant misled, and continues to mislead, consumers including Plaintiff
and Class Members, by making untrue and misleading statements and failing to disclose
information required by California law.
As a direct and proximate result of Defendant’s misleading and false
advertisements, Plaintiff and Class Members have suffered injury in fact and have lost
money. As such, Plaintiff requests that this Court order Defendant to restore this money
to Plaintiff and all Class Members, and to enjoin Defendant from continuing these unfair
practices in violation of the Unfair Competition Law in the future, and in addition to pay
for the cost of notice to the class and Plaintiff’s attorney’s fees and costs. Otherwise,
Plaintiff, Class Members, and the broader general public will be irreparably harmed
and/or denied an effective and complete remedy.
COUNT III
VIOLATIONS OF THE CONSUMERS LEGAL REMEDIES ACT (“CLRA”)
(CAL. CIV. CODE §§ 1750, et seq. )
Plaintiff repeats and re-alleges the allegations contained in every preceding
paragraph as if fully set forth herein.
Plaintiff brings this Claim individually and on behalf of the members of the
Class against Defendant.
Defendant is a “person” under Cal. Civ. Code § 1761(c).
Plaintiff and Class Members are “consumers,” as defined by Cal. Civ. Code
§ 1761(d).
Defendant’s sale of Harbor Freight products at its retail stores, through call
centers, and online, to Plaintiff and the Class, were “transactions” within the meaning of
California Civil Code § 1761(e).
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The products purchased by Plaintiff and the Class are “goods” within the
meaning of California Civil Code § 1761(a).
By making affirmative misrepresentations about the products and by
concealing material facts about the products, Defendants engaged in deceptive business
practices prohibited by the CLRA, Cal. Civ. Code § 1750, et seq., including:
§ 1770(a)(2): Misrepresenting the source, sponsorship, approval, or
certification of goods by claiming that the goods are being sold at an
approved or certified sale price, when in fact they are not;
§ 1770(a)(3): Misrepresenting the affiliation, connection, or association
with, or certification by, another by claiming that competitors sell the goods
at the "regular" or "comp at" price, when in fact they do not;
1770(a)(5): Representing that goods have characteristics, uses, or benefits
which they do not have by claiming that the goods are being sold at a sale
price when in fact they are not;
§ 1770(a)(7): representing that goods are of a particular standard, quality, or
grade if they are of another by claiming that the goods were purchased on
sale, or were implying that the goods are a "bargain," when in fact they are
not;
§ 1770(a)(9): advertising goods with intent not to sell them as advertised
because Defendant knew that the goods were not being sold at a sale a price;
§ 1770(a)(13): Making false or misleading statements of fact concerning
the reasons for, existence of, or amounts of price reductions;
§ 1770(a)(16): representing the subject of a transaction has been supplied in
accordance with a previous representation when it has not representing that
Case 5:16-cv-01052 Document 1 Filed 05/20/16 Page 32 of 37 Page ID #:32
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certain goods were once sold at a "regular" price or "comp at" price when in
fact they were not.
Defendant had, and has, a duty to make material disclosures about the true
nature of the Products and its pricing schemes.
A reasonable consumer would not have purchased nor paid as much for the
Defendant’s products had Defendant disclosed the truth about the sale prices of the
products, as that information is material to a reasonable consumer.
As a result of its violations of the CLRA detailed above, Defendant has
caused, and continues to cause, harm to Plaintiff and Class Members and, if not stopped,
will continue to harm them. Had Plaintiff known the truth about the Products he would
not have purchased, or paid as much for, the Products.
In accordance with Civil Code § 1780(a), Plaintiff and Class Members seek
injunctive and equitable relief for Defendant’s violations of the CLRA. In addition, after
mailing appropriate notice and demand in accordance with Civil Code § 1782(a) & (d),
Plaintiff will subsequently amend this Complaint to also include a request for damages.
Plaintiff and Class Members request that this Court enter such orders or judgments as
may be necessary to restore to any person in interest any money which may have been
acquired by means of such unfair business practices, and for such other relief, including
all costs of notice to the class plus attorneys’ fees and costs, as provided in the CLRA,
Civil Code § 1780 and the Prayer for Relief. See Ex. 2.
Case 5:16-cv-01052 Document 1 Filed 05/20/16 Page 33 of 37 Page ID #:33
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COUNT IV
DECEIT BY SUPPRESSION OF FACTS
(CAL. CIV. CODE § 1710(3))
Plaintiff repeats and re-alleges the allegations contained in every preceding
paragraph as if fully set forth herein.
Plaintiff brings this Claim individually and on behalf of the members of the
Class against Defendant.
California Civil Code Section 1710(3) provides that a “deceit” includes
“[t]he suppression of a fact, by one who is bound to disclose it, or who gives information
of other facts which are likely to mislead for want of communication of that fact.”
As set forth above, during the Class Period, Defendant suppressed, and
continues to suppress, material facts concerning the true nature of its pricing schemes and
sales prices. Defendant had, and has, a duty to make these disclosures based on its
superior knowledge of its products and pricing schemes.
During the Class Period, Defendant actively concealed, and continues to
conceal, material facts, in whole or in part, with the intent to induce Plaintiff and Class
Members to purchase its products. Specifically, Defendant actively concealed the truth
about its pricing schemes and its “comp at” pricing by not disclosing all facts about the
true value of the products or that the products were never sold by Defendant at so-called
“regular” prices or that “comp at” prices did not reflect the market value of equivalent or
comparable merchandise.
Plaintiff and Class Members were unaware of these concealed or omitted
material facts and would not have acted as they did if they had known of those facts.
Plaintiff and the Class suffered injuries that were directly and proximately
caused by Defendant’s active concealments and omissions of material facts in that they
overpaid for the products that were purportedly a bargain.
Defendant’s fraudulent concealments and omissions were a substantial
factor in causing the harm suffered by Plaintiff and Class Members, as they would not
Case 5:16-cv-01052 Document 1 Filed 05/20/16 Page 34 of 37 Page ID #:34
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have purchased the products at all, or would have paid much less for the products, if all
material facts were properly disclosed.
Defendant’s conduct was systematic, repetitious, knowing, intentional, and
malicious, and demonstrated a lack of care and reckless disregard for Plaintiff and Class
Members’ rights and interests. Defendant’s conduct thus warrants an assessment of
punitive damages under Cal. Civ. Code § 3294 and other applicable states’ laws,
consistent with the actual harm it has caused, the reprehensibility of its conduct, and the
need to punish and deter such conduct.
VI. PRAYER FOR RELIEF
WHEREFORE, Plaintiff and the Class Members request that the Court enter an
order or judgment against Defendant including the following:
A. An order certifying the Class pursuant to Rule 23(b)(2) with respect to class
wide remedies for declaratory or injunctive relief;
B. An order certifying the Class pursuant to Rule 23(b)(3) with respect to class
wide remedies for damages, punitive damages, restitution, and injunctive
relief;
C. Should the class be un-certifiable under Rules 23(b)(2) or 23(b)(3), Plaintiff
may seek an order certifying a “particular issue class” to determine the issue
of liability pursuant to Rule 23(c)(4);
D. An order appointing Plaintiff as the Class Representative for the Class and
The Law Offices of Ronald A. Marron, APLC and the Law Office of David
Elliot as counsel for the Class;
E. An order requiring Defendant to bear the costs of Class notice;
F. Restitution in such amount that Defendant has been unjustly enriched by the
benefits conferred on it by Plaintiff and Class Members;
G. For Plaintiff's Count IV, nominal damages, actual damages, punitive
damages;
Case 5:16-cv-01052 Document 1 Filed 05/20/16 Page 35 of 37 Page ID #:35
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H. For Plaintiff's Counts I through III, restitution and disgorgement of ill-gotten
gains (except for the CLRA), plus injunctive and other equitable relief;
I. An order declaring Defendant’s conduct as unlawful, unfair, and/or
fraudulent, and an order enjoining Defendant from unlawfully marketing
and selling its Products in violation of federal and state law;
J. An order awarding Plaintiff his costs of suit, including reasonable attorneys’
fees and pre- and post-judgment interest on such monetary relief;
K. An order requiring an accounting for, and imposition of, a constructive trust
upon all monies Defendant received as a result of the misleading, fraudulent,
and unlawful conduct alleged herein; and
L. Such other relief to which Plaintiff and Class Members may be entitled to at
law or in equity.
JURY TRIAL
Plaintiff hereby demands a jury trial for all of the claims so triable.
Dated: May 20, 2016 Respectfully submitted,
/s/ Ronald A. Marron
Ronald A. Marron
LAW OFFICES OF
RONALD A. MARRON
Ronald A. Marron, Esq.
651 Arroyo Drive
San Diego, CA 92101
Telephone: (619) 696-9006
Fax: (619) 564-6665
/s/ David Elliot
David Elliot
LAW OFFICE OF DAVID ELLIOT DAVID ELLIOT (SBN 270381) [email protected]
Case 5:16-cv-01052 Document 1 Filed 05/20/16 Page 36 of 37 Page ID #:36
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2028 3rd Avenue San Diego, CA 92101 Telephone: (858) 228-7997
Counsel for Plaintiff and the Proposed
Class
Case 5:16-cv-01052 Document 1 Filed 05/20/16 Page 37 of 37 Page ID #:37
EXHIBIT 2
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 1 of 10 Page ID #:577
LAW OFFICES OF
RONALD A. MARRON
A PROFESSIONAL LAW CORPORATION
651 Arroyo Drive Tel: 619.696.9006
San Diego, California 92103 Fax: 619.564.6665
May 11, 2016
Via: Certified Mail, (receipt acknowledgment with signature requested)
Harbor Freight Tools USA, Inc.
Attn: Legal Dept.
26541 Agoura Road
Calabasas, California 91302-2093
Corporation System Co. d/b/a CSC – Lawyers Incorporating Service
Agent for Service of Process for Harbor Freight Tools USA, Inc.
2710 Gateway Oaks Drive, Suite 150N
Sacramento, California 95833
RE: NOTICE: Violations of Consumer Protection Laws, and Duty to Preserve Evidence
Dear Sir or Madam,
PLEASE TAKE NOTICE that our law firm, along with the Law Office of David Elliot,
represents Ted Shimono, a California resident and purchaser of Harbor Freight products. All further
communications intended for our client must be directed through this office. This notice and demand
letter provides Harbor Freight Tools USA, Inc. (“YOU” or “YOUR”) with notice of YOUR violations
of California’s Consumers Legal Remedies Act, Cal. Civ. Code §§ 1750, et seq. (“CLRA”); False
Advertising Law, Cal. Bus. & Prof. Code §§ 17500, et seq. (“FAL”); Unfair Competition Law, Cal. Bus.
& Prof. Code §§ 17200, et seq. (“UCL”); and other related consumer-protection laws. This letter is
further meant to comply with, and constitutes notice under, the CLRA and similar consumer protection
laws in other states requiring pre-suit demand and notice, and of our client’s demand that YOU remedy
such violations within thirty (30) days of your receipt of this letter. This demand and notice letter is
provided on behalf of our client and any additional “plaintiffs” should this matter proceed to litigation.
As a discount tool and equipment retailer, YOU market, promote, advertise, and sell a variety of
branded and exclusive house-brand merchandise, including, but not limited to, tools, equipment,
accessories, and other products at purported “sale” prices (the “Products”) through over 600 retail stores
in 47 states, by telephone catalog sales through call centers, and via YOUR own online website,
http://www.harborfreight.com/. In an effort to induce consumers to purchase YOUR Products at inflated
prices, YOU misleadingly market YOUR Products through comprehensive and consistent fake-sale-
price advertising to consumers at the point of purchase and through periodically-mailed and distributed
flyers, catalogs, circulars, and other promotional materials, prominent in-store displays, web pages,
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 2 of 10 Page ID #:578
Demand Letter Page 2
emailed “offers,” and print advertisements—falsely creating in consumers’ minds the impression that
YOUR “sale priced” merchandise was reduced in price from YOUR previous retail prices, that
advertised “savings” were real when they were not, and that advertised “comp at” prices were valid
comparisons with equivalent merchandise. Specifically, YOUR advertising uniformly compares YOUR
Products’ ostensible sale prices to invented “regular” prices, “Only” prices, and “comp[are] at” prices,
which were, and are, misrepresented as prevailing market retail prices, customary store prices, and/or
prices of comparable merchandise, from which fictitious savings are then calculated and communicated
to consumers through various advertising mediums. However, YOUR supposed discounts were, and are,
calculated from sham “regular” or “comp at” prices that were artificially inflated, and were never the
regular retail prices for YOUR merchandise or comparable retail prices for products of the same quality
or value as the Products that YOU sell. In addition, the represented “retail” or “comp at” prices were not
the prevailing market retail prices within three months immediately preceding the publication of the
advertised former prices, as required by California law. Indeed, the difference between the “sale” and
“regular” or “comp at” prices is a false discount used to induce consumers into purchasing Products they
have been led to believe are significantly discounted.
YOU also advertise coupon savings that state, for example, “20% off your purchase of any one
item.” In addition to printing the coupons so as to deliberately mislead customers—the fact that the
customer will receive 20% off one item rather than their entire purchase is deliberately obscured from
the consumer—when consumers try to use the “% off” coupon, sales associates do not apply the
percentage savings to an item of the customer’s choosing but rather apply the percentage discount to the
lowest-priced item in the customer’s order, rendering false the “any item” percentage savings as
advertised.
Through YOUR false and deceptive marketing, advertising, pricing, and sales scheme, YOU
violated, and continues to violate, California law prohibiting the advertising of goods for sale as
discounted from former prices which are false, and prohibiting misleading statements about the
existence and amount of price reductions. Specifically, YOU violated, and continue to violate,
California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act, as
well as the Federal Trade Commission Act (“FTCA”), which prohibits “unfair or deceptive acts or
practices in or affecting commerce” (15 U.S.C. § 45(a)(1)) and false advertisements (15 U.S.C. § 52(a)).
Between approximately June 2013 and March 2016, our client shopped at the Harbor Freight
Tools USA retail store in Murrieta, California numerous times to purchase tools, equipment, accessories,
and other related merchandise for himself and his family, after being induced to visit the retail store by
YOUR print, direct-mail, and online advertising that purported to offer steep discounts on quality
merchandise. Specifically, our client purchased, among other merchandise, solar security lights, tool
bags, tarps, electric drills and drill bits, saw horses, hammers, tool racks, storage containers, and
numerous other Products and merchandise from YOU. All of this merchandise was advertised as having
“regular” prices, “retail” prices, “comp at” prices, “[o]nly” [regularly priced] prices, and/or “save” in a
blue or other-colored circle. That advertising purported to offer “Sale” prices and compared those
purported sale prices against much higher prices that YOU intended consumers to believe were YOUR
prior retail prices, or actual or comparable market prices for the same merchandise or merchandise of the
same quality. YOUR marketing, advertising, and information communicated to our client that all of this
merchandise represented significant savings relative to the Products’ normal retail prices and
comparable market values. By way of illustration, in or around June 2015, our client purchased a solar
security light from YOU, after relying on YOUR misrepresentations and deceptive marketing. The
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 3 of 10 Page ID #:579
Demand Letter Page 3
product advertising displayed a strike-through price of “Only $59.99”, suggesting that YOUR usual
price for this unit was $59.99 and that the unit was being offered at a discount from that former price.
This advertisement represented that the unit was at that time being offered at a substantial discount from
the former price, showing the current price as: “Sale: $39.99”. However, YOUR purported strike-
through price and the implied price discount and savings were false and misleading, as the prevailing
retail price for the product during the three months immediately prior to our client’s purchase was not
the strike-through price advertised by YOU.
Relying on YOUR artificially inflated comparison prices and false discounts, our client suffered
injury and was damaged economically by his purchases of YOUR products. Our client was induced by
YOUR falsely advertised discounts and sale prices to buy Products he would not have purchased absent
the false advertising, and to purchase those Products at prices greater than their true market value. Our
client would like to shop at Harbor Freight again in the future, but cannot trust YOUR current price-
comparison advertisements. Without tracking YOUR advertisements on a daily basis for each and every
item, and conducting intensive price, quality, and market research and analysis, our client and other
consumers have no realistic way of knowing which of YOUR current or future price comparisons are
false or deceptive. A reasonable consumer would have relied on the deceptive and false claims made in
YOUR advertisements, and through the exercise of reasonable diligence would not have discovered the
violations alleged herein because YOU actively and purposefully concealed, and continue to conceal,
material facts about YOUR pricing scheme—including the true value of the Products or that the
Products were never sold by YOU at so-called “regular” prices, or that “comp at” prices did not reflect
the market value of equivalent or comparable merchandise.
Please be advised that YOUR unfair methods of competition, or unfair or deceptive acts and
practices in violation of the CLRA include, but are not limited to:
§ 1770(a)(2): Misrepresenting the source, sponsorship, approval, or certification of goods
by claiming that the goods are being sold at an approved or certified sale price, when in
fact they are not;
§ 1770(a)(3): Misrepresenting the affiliation, connection, or association with, or
certification by, another by claiming that competitors sell the goods at the “regular” or
“comp at” price, when in fact they do not;
1770(a)(5): Representing that goods have characteristics, uses, or benefits which they do
not have by claiming that the goods are being sold at a sale price when in fact they are
not;
§ 1770(a)(7): representing that goods are of a particular standard, quality, or grade if they
are of another by claiming that the goods were purchased on sale, or were implying that
the goods are a “bargain,” when in fact they are not;
§ 1770(a)(9): advertising goods with intent not to sell them as advertised because YOU
knew, and know, that the goods were not being sold at a sale a price;
§ 1770(a)(13): Making false or misleading statements of fact concerning the reasons for,
existence of, or amounts of price reductions; and
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 4 of 10 Page ID #:580
Demand Letter Page 4
§ 1770(a)(16): representing the subject of a transaction has been supplied in accordance
with a previous representation when it has not representing that certain goods were once
sold at a “regular” price or “comp at” price when in fact they were not.
In sum, YOU have failed to honor YOUR consumer protection obligations. To cure the harmful
conduct noted herein, demand is hereby made that YOU: (1) cease and desist from marketing and selling
YOUR Products in a false and misleading manner, as alleged above; (2) conduct a corrective advertising
campaign and destroy all misleading advertising materials; and (3) make full restitution to YOUR
customers, including our client, who have purchased YOUR Products which were deceptively
represented as discounted from false former prices, and/or who were overcharged for advertised
merchandise or deceptively induced by misleading coupon offers to purchase YOUR merchandise,
including all purchase money YOU obtained from the sales thereof.
Please be advised that YOUR failure to comply with this request within thirty (30) days may
subject YOU to the following remedies, available for violations of the CLRA, which will be requested
through a class action complaint on behalf of our client, all other similarly-situated U.S. residents, and
the general public:
(1) The actual damages suffered;
(2) An order enjoining YOU for such methods, acts, or practices;
(3) Restitution of property (when applicable);
(4) Punitive damages;
(5) Any other relief which the court deems proper; and
(6) Court costs and attorneys’ fees.
Under state consumer protection laws that do not require advance notice of intent to sue, YOU
may already be liable for any or all of these remedies. In addition, California Civil Code Section
1780(b) provides in part that: “Any consumer who is a senior citizen or a disabled person, as defined in
subdivision (f) and (g) of Section 1761, as part of an action under subdivision (a), may seek and be
awarded, in addition to the remedied specified therein, up to five thousand dollars ($5,000)… [emphasis
added]”.
Additionally, we further remind you of your legal duty to preserve all records, documents, and
other evidence which refer or relate to any of the above-described practices.
“The duty to preserve evidence is triggered when litigation is pending or reasonably foreseeable, at
which time a party is required to preserve all relevant evidence and put into place a litigation hold to
preserve relevant documents.” Net-Com Services, Inc. v. Eupen Cable USA, Inc., No. 11-cv-2553, 2013
WL 4007785, at *2 (C.D. Cal. Aug. 5, 2013); see also Convolve, Inc. v. Compaq Computer Corp., 223
F.R.D 162, 175 (S.D.N.Y 2004); Computer Ass’n Int’l v. American Fundware, Inc., 133 F.R.D. 166,
168-69 (D. Colo. 1990). This Firm anticipates that all e-mails, letters, reports, internal corporate instant
messages, and records that relate to the marketing and pricing of YOUR Products will be sought in the
forthcoming discovery process. YOU therefore must inform any employees, contractors, and third-party
agents (for example product consultants and advertising agencies handling YOUR product account) to
preserve all such relevant information.
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 5 of 10 Page ID #:581
Demand Letter Page 5
We are willing to discuss an appropriate way to remedy the demands asserted in this letter. If
YOU wish to enter into such discussion, please contact us immediately. If our Firm does not hear from
YOU promptly, we will conclude that YOU are not interested in resolving this dispute short of litigation
in the form of a class action lawsuit. If YOU contend that any statement in this letter is inaccurate in
any respect, please provide our office with YOUR contentions and supporting documents promptly.
We look forward to YOUR response and to being informed that YOU have initiated corrective
action. Thank you for your time and consideration in this matter.
Sincerely,
/s/ Ronald A. Marron
Ronald A. Marron
LAW OFFICES OF RONALD A. MARRON, APLC
/s/ David Elliot
David Elliot
LAW OFFICE OF DAVID ELLIOT
2028 3rd Avenue
San Diego, CA 92101
Attorneys for Mr. Shimono, all others similarly situated, and the
general public
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 6 of 10 Page ID #:582
SENDER: COMPLE:1f: THIS SECTION
• Complete items 1, 2, and 3. • Print your name and address on the reverse
so that we can return the card to you. • Attach this card to the back of the mailpiece,
or on the front if 1. Article Addressed to:
Harbor Freight Tools USA, Inc. Attn: Legal Department
26541 Agoura Road
Calabasas, CA 91302-2093
1111111111111111111111111111111111111111111111 9590 9402 1650 6053 0358 88
D. Is delivery address different from item 1 ? If YES, enter delivery address below:
3. Service Type 0 Adult Signature
Adult Signature Restricted Delivel}' I)"(Ce~:IRed Mail®
Mail Restricted Dellvel}'
0 Priority Mail Express® 0 Registered MaJITM 0 Registered Mall Restricted
D&IIVel}'
--=----:--::-:-----:-:-:---=--=--=----:----:-:--::------1 0 Collect on Delivel}' 2. Article Number (Transfer from service label) 0 Collect on DeliveJY Restricted Delivel}'
lit Aetum Receipt for ' '-Merchandise 0 Signature ConfirmationTM 1 0 Signature Confirmation 11 ................... k1all
7 0 1 b 0 3 4 0 0 0 0 0 419 4 2 5 31 ~11 Restricted Delivel}' Restricted DeliveJY
PS Form 3811, July 2015 PSN 7530-02-000-9053 Pomestlc Return Receipt
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 7 of 10 Page ID #:583
11111111111111 First-Class· Mail Postage & Fees Paid USPS Permit No. G-10
9590 9402 1650 6053 0358 88
United States Postal Service
• Sender: Please print your name, address, and ZIP+4® in this box•
Law Offices of Ronald A. Marron~ 651 Arroyo Drive
San Diego, CA 92103
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 8 of 10 Page ID #:584
' SENDER: COMPLETE THIS SECTION
• Complete items 1, 2, and 3. • Print your name and address on the reverse
so that we can return the card to you. • Attach this card to the back of the mall piece,
or on the front if its. 1. Article Addressed to:
CSC- Lawyers Incorporating Service Agent of Service of Process for Harbor
Freight Tools USA, Inc.
2710 Gateway Oaks Drive, Suite 150N
Sacramento, CA 95833
1111111111111111111111111111111111111111111111 9590 9402 1650 6053 0358 95
2. Article Number service label)
7016 0340 DODD 4194 PS Form 3811, July 2015 PSN 7530-02-000-9053
11Ay 71 20 ' 111
Domestic Return Receipt.
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 9 of 10 Page ID #:585
I USPS TRACKING# ....-------~ I
IIIII I I IIIII II I First-Class Mail Postage & Fees Paid USPS Permit No. G-10
9590 9402 1650 605~ 0358 95
United States Postal Service
• Sender: Please print your name, address, and ZIP+4® in this box•
e:;. Law Offices of Ronald A. Marron
651 Arroyo Drive San Diego, CA 92103
II~- ---iny-
"' ~1 I"'' I Ill"" I 1l'1 I'' 'I'' 1/11 II I 1/J' I llil'''''"''''''' ,n~t
Case 5:16-cv-01052 Document 1-2 Filed 05/20/16 Page 10 of 10 Page ID #:586